12/17/2014 Kase Chat

RBOB Gasoline continued its decline and met a crucial target at 155.8 for the primary wave down from 315.2. The trend terminus (T = 156.3), is the lowest that most trends extend. However, there is no evidence that the decline is going to end. The next targets are 147.3 and 139.2. The KaseCD is setup for divergence and the KasePO is oversold, so a correction may take place soon. Last week’s midpoint and open are initial resistance at 168.1 and 176.5. A close over 176.5 would call for $198.3.

rbob




Kase’s senior analyst Dean Rogers reviews trade setups and price forecasts for e-mini S&P 500, AAPL, and MSFT, using Kase Wave Analysis and Kase StatWare.

http://youtu.be/SZ-ipWldKTc

Coming into this week there was an outside chance that Brent would hold $67.0. However, prices settled below $67.0 on Monday. There is immediate support at $65.2 as discussed in this week’s Crude Oil Commentary, but the decline is now poised for at least $62.8 and likely $58.5 before a measurable retracement takes place. The key target is $58.5 because it is the most confluent wave projection and the equal to (1.00) target for the wave $112.59 – 83.41 – 88.42. A sustained close below this will open the way for $53.8 and $48.7.

There is very little evidence that the move down is going to end at this time. Prices are still deeply oversold and overdue for a correction, but until at least initial resistance at $70.5 is overcome, the move down is favored. Next resistance is $72.1, and a close over the this would call for and an extended correction to $75.1 and possibly $79.8.

For detailed weekly forecasts take a trial of our energy commentaries.

brent


The outlook for WTI Crude Oil is negative, but prices met crucial support at $63.4. This is a confluent wave projection for the January contract, and more importantly, is the 62 percent retracement from the perpetual low of $32.4 to $114.83. In addition, the KaseCD is oversold on the monthly chart. The importance of $63.4 indicates it is a potential stalling point, but there is little technical evidence so far to definitively call for a bottom. A sustained close below $63.4 will call for $49.7. Key near term resistance is $73.3.

For more detailed energy forecasts please take a trial of the Energy Price Forecasts.

CL1


The HOCL crack spread has narrowed after forming a double top at $27.26. A close below the $18.887 swing low would confirm the pattern. KaseX also indicates the spread should narrow. However, the move may be corrective. Crucial support at $22.38 is the 62 percent retracement from $18.887 and the 38 percent retracement from $14.987. A close below $22.38 would call for $19.5; the last level protecting $18.887. Resistance at $25.6 is key. A sustained close over this would open the way for $31.14 and higher.

Please click the links for more information about KaseX and our energy forecasts.

HOCL




Kase’s senior analyst Dean Rogers reviews trade setups and price forecasts for e-mini S&P 500, crude oil, natural gas, AAPL, and VIPS using Kase Outlook, Kase StatWare, and KaseX.

http://youtu.be/pLCujMm5-WE

The WTI-Brent spread narrowed last week, but the move looks corrective. The spread will likely oscillate for the near-term, but ultimately odds favor a widening spread. The first target is (5.00), and a close below this would call for (6.50) and (9.00). Key long-term support is (11.80). This is a confluent wave projection and the 62 percent retracement from (19.38) to (0.01). Resistance at (0.90) should hold. A sustained close over (0.90) would open the way for 1.30 and 2.90.

For more information and to take a trial of Kase’s weekly energy forecasts please visit the Energy Price Forecasts page.

WTI-Brent


On Oct. 30, a colleague called frantically about 10-year German government bonds taking a major reversal after weak German business confidence data had been released. He was having difficulty gauging the importance of the news, and hoped that technicals would put the talking-head chatter into perspective, something fundamentals alone couldn’t do.

I plotted a daily candlestick chart with the RSI, MACD and Stochastic. GDBR10 had been in a downward oscillating trend for decades, interrupted by prolonged corrections, the latest of which ended in mid-January. The recent run up lasted eight days, so just from a duration standpoint, it wasn’t much of a recovery. Days six and seven formed a bearish Harami line and star. Oct. 27 closed below the midpoint of the Oct. 23 Harami line, indicating that the pattern was complete. So, even without indicators the candles showed a clear bearish pattern.

Candlesticks Showed Bearish Signal Before Other Indicators
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However, none of the indicators were either divergent or overbought. This is a key fault of these indicators in that they are “unidirectional” — when they trigger the follow through is good, but they often lack signals ahead of turns.

These common indicators were originally for calculators, not computers. The solution is to use new approaches which employ computationally intense algorithms to optimize for serial dependency, cycle length, and scale for logarithmic volatility. This results in bi-directional indicators and statistically significant stops, such as the KaseCD and Kase DevStops.

The KaseCD goes magenta when it’s overbought or oversold, as on Oct. 27, warning of a possible turn. Anyone long the eight day rally should have become increasingly cautious, especially as the following days were sideways. This would have meant scaling back a long position, or perhaps selling covered calls.

KaseCD Turned Magenta to Signal Overbought Level
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Earlier signals missed on the first chart were caught as well. Oct. 16’s turn was clearly signaled by a KCD momentum divergence, as marked by the automatically generated red divergence lines. The mid-September decline was signaled by the KCD overbought “K.”

Cynthia Kase, President
President
Kase and Company, Inc.

For a no-charge trial of Kase StatWare on Bloomberg visit APPS CS:KASE, which includes the KaseCD and Kase DevStops, contact us if you have any questions.